IEEE Power Electronics Magazine - September 2016 - 38

Entrepreneur Viewpoint

by Deepak Divan

Entrepreneurs Drive
Creative Destruction

he paradoxical term creative
destruction, coined by Joseph
Schumpeter in 1942, refers
to the cycle of incessant product
and process innovation that drives a
replacement of the old guard with
new companies, especially within a
capitalistic system. How do we recognize such entrepreneurial opportunities, and how do we make them
happen? Most of us in engineering
dedicate our lives to finding answers.
We learn this in engineering school,
where our professors provide us
with questions that we diligently
solve and on which we are graded.
We all learn from a common framework and context, harmonized by
global standards as to what constitutes a sound education. In our professional lives, we apply our skills,
knowledge, experience, and wisdom to solving ever-more challenging problems.
In our field of power electronics,
representing a US$70 billion per year
and growing market, there are a large
number of companies and researchers
who try to outdo each other in terms
of power density, functionality, cost,

In subsequent columns, the columnist will share learning and experiences as well as discuss the challenges
of obtaining venture capital funds.
Digital Object Identifier 10.1109/MPEL.2016.2585538
Date of publication: 7 September 2016

IEEE POWER ELECTRONICS MAGAZINE

and assorted metrics. Many of these
companies are backed by deep
domain expertise; very close contact
with customers with aligned product
and technology road maps; vast
resou rces; a nd la rge tea ms of
dedicated, skilled, and knowledgeable
engineers. They are addressing the
most visible and obvious questions. A
global market begets a standard set of
questions being addressed, questions
that are understood and known by
most of the experts. In such an environment, it is clear that the winner is
the one who finds the best answer and
does it fast and economically.
How can a lone entrepreneur with
a rag-tag team and virtually no resources ever compete and win against
these behemoths? The short answer is
that they typically cannot. But every
once in a while, they do! What makes
the exception? The aforementioned
discussion presumes the questions
we are working on are the right ones.
When was the last time you questioned the question itself? Finding the
right set of questions is at the heart of
being an entrepreneur.
When the market is stable and well
defined, with a clear growth trajectory that builds on prior investments,
a technology/product road map that
requires incremental innovation and
development, and a need for the product/services that is well understood
by the customer base, it is very difficult for an entrepreneur to come in
and carve out significant market

z September 2016

share. But there are certain conditions under which entrepreneurs can
find opportunity and increase their
chances of success.
Efficient scaling principles [e.g.,
for light-emitting diodes (LEDs) and
power devices], stoked by large available markets and appropriate incentives (e.g., for photovoltaic), can
result in collapsing prices, severely
challenging existing business models
and investments, causing severe
market disruptions. Crashing prices
in adjacent spaces (e.g., memory,
computation, and the Internet of
Things), when integrated with core
power technologies, can enable new
features, functions, and services that
existing products simply cannot
deliver. Finally, changes in societal
values (e.g., climate change) can
enable a brand new set of opportunities that cannot be serviced by existing market leaders with their conventional solutions.
It should be noted that, while much
of the discussion of entrepreneurship
assumes a capitalistic system, we see
perhaps the biggest growth in entrepreneurial ventures in more controlled
economies, such as in China. Much
of the expansion of the global power
electronics, LEDs, and solar market
has been driven by hypercompetitive
companies from such centralized
economies, aggressively driving down
prices, often at a loss, trying to capture
market share with a target of getting
costs to a sustainable level as growth

Table of Contents for the Digital Edition of IEEE Power Electronics Magazine - September 2016